The arrival of International Women’s Day on 8 March celebrates women’s achievements around the world. It’s also an opportunity to reflect on what strides are needed to improve gender equality across all aspects of our lives.

When it comes to retirement, there is still plenty of work to be done.

Currently, women retire with around half the super that men do. The gap starts out small and widens progressively as the power of compounding interest takes effect. 

The reason why this occurs is a complex mixture of systemic and workplace issues such as the gender pay gap, unpaid caring work, part-time work and even some financial literacy.

For example, the latest analysis from the Workplace Gender Equality Agency (WGEA) shows that, on average, women earn $263 per week less than men. This doesn’t just hurt women financially in the moment, but also again at retirement.

This is because superannuation grows in three key ways: by employer contributions, by extra member contributions and through the power of compounding ,where investment earnings are reinvested to boost super savings. 

Because employer super contributions are paid as a percentage of wages (currently 10.5 per cent of wages), women who earn less than men receive less super. Women are also likely to have far less disposable income to make extra contributions. When both these issues occur early in a woman’s working life, there is less super to benefit from the impact of major compounding. 

Women also do more unpaid caring work than men – be it caring for kids, elderly parents or even a spouse. While this work benefits society and our economy, it doesn’t qualify for super payments, creating an even bigger divide between how much super women have and what they realistically need to retire with dignity.  

Bridging the gap

The impact of all these issues on women’s retirement savings is glaringly evident when we examine the balances of TelstraSuper members. 

The savings gap between male and female TelstraSuper members at age 30 is about $10,000. While this is a significant difference, it’s not really life-changing. 

“Choosing the right super fund as your employer default fund is an enormous responsibility that can have a huge impact on the retirement wellbeing of your staff.”

Fast forward to age 60 and the median super balance for TelstraSuper male members is around $450,000 – almost double that of female members of the same age, who have a median super balance of $249,000. 

This gap is not unique to TelstraSuper, but rather a widespread issue across the industry. An extra $200,000 can significantly boost yearly retirement income for many years, particularly when combined with the Age Pension. 

The role of employers

While there is no silver bullet to close the gender savings gap, employers certainly have a role to play in improving retirement outcomes for women. This might include:

1. 1. Investigating the extent to which there is a gender pay gap at your company and looking at ways to close it. While it is not yet law, current government proposals to amend the Workplace Gender Equality Act will see companies with more than 100 employees required to report their gender pay gap publicly. While reporting is a good first step, committing to closing the gap is even better.
   2. Finding ways to support those with caring responsibilities in your workplace. This could be flexible work hours, shorter work weeks or paid carers’ leave, and improving awareness of the policies in place to support people should they assume an unpaid caring responsibility.
   3. Providing staff with financial literacy and education services, so if they are taking time away from the paid workforce they know how to make the most of their situation financially.
   4. Considering paying super on both paid and unpaid parental leave. Missing out on these contributions – and the potential compound interest on them – is a contributor to the super gap.
   5. Supporting your staff to overcome both conscious and unconscious bias. Encourage them to be advocates for equality and to question if they make gender-based decisions or if a policy will advantage or disadvantage a particular gender.

How your default fund can impact employees’ futures

Choosing the right super fund as your employer default fund is an enormous responsibility that can have a huge impact on the retirement wellbeing of your staff. This is because in super, every dollar counts. 

It’s important to consider the growth that the fund is providing in returns once the fees and costs are taken out. This is called the net benefit and it helps you to understand the true value a fund can provide to its members.  

Other things to consider include:

• Investment performance after fees and costs are taken out
• Fund values and approach to sustainability 
• Services available to your employees such as education, online tools and calculators
• Services available to employers such as easy transition, onboarding and reporting.

Another consideration can be the financial education programs that a super fund can offer to your staff. While financial literacy can be a key contributor to overall wellness, the latest Household Income and Labour Dynamics in Australia study found that financial literacy in Australians has actually fallen between 2016 and 2020. 

Super funds are well placed to help bridge this gap, with many offering  webinars and seminars on key topics, and some even offering financial advice over the phone or in person. 

It’s on us as a society to find ways to provide greater support for our female workers, acknowledge the tremendous contribution they make to the workplace and economy.

Chris Davies is the CEO of TelstraSuper and a WGEA Pay Equity Ambassador.

Need help taking steps to reduce bias and support inclusion in the workplace? AHRI’s short course will provide you with techniques to create a diverse and inclusive workplace.